On Tuesday, South Korea’s new administration increased its growth outlook for 2017. Moon declared that his regime would maintain an expansionary fiscal policy aimed at supporting job creation. Moreover, the new administration is headed towards a labor-friendly economy that would include all sectors in terms of economic prosperity.
Restructure the Construction Industry
The Finance Ministry of South Korea revealed that as part of the government’s plans, it would want to work out restructuring the construction industry at the latter part of the year.
A Finance Ministry official stated in an interview, “We are thoroughly looking across many industries, but the construction industry is one sector under review for now. Measures to strengthen the industry’s competitiveness will be announced in December.” He further stated that, “Smaller construction companies rather than some of the nation’s major companies seem to have problems.”
It was also made clear by the ministry that the main objective of the plan is to execute “pre-emptive and powerful corporate restructuring” to ensure that hopeless companies do not upset the whole construction sector in the future.
South Korea Economic Expansion through a Five-Year Economic Plan
This year the South Korean government projected an economic expansion of 3% and it is the fastest growth ever recorded since the year 2014 with a recorded growth of 3.3%. Aside from reforming the construction sector, the country is shifting its gears in boosting household income and increasing the social safety net.
In addition, the finance ministry of the South Korean government vowed to deal with issues regarding social inequality by improving wages and unemployment benefits and running after big corporations exhibiting unfair business practices and imposing bigger fines to those found violating the laws.
The country also aims to improve transparency and governance of South Korea’s business conglomerates (chaebol) and to improve labor conditions by moderating long working hours.
The projected growth this year by the government is higher than the growth projection estimate of Bank of Korea which is 2.8%. In addition, on Saturday the parliament submitted a supplementary budget of ₩11 trillion (11 trillion won or $9.85 billion).
The growth projection was revised from the earlier estimation of 2.6% since the government supposes strong exports will remain in the second half of the year as there are increasing demands for Korean products like flat panel displays and memory chips. The export figures may reach 10.2% this 2017 and domestic or local consumption is forecasted to increase by 2.3 percent.
Complete Paradigm Shift
“The beginning of the new paradigm will be people. To shift the paradigm, the future economic policy will focus on four directions: income-drive growth, jobs-focused economy, innovation and fairness.” Finance Minister Kim Dong-yeon said in an interview.
Back in the Park era, rapid industrialization is the main aim and Dictator Park Chung-hee supported the existence of big, family-controlled businesses (chaebols). These chaebols helped the country rebuild itself from the remains of the Korean War. However, it has come to a point in South Korea’s current economy that the chaebols are dominating the economy leading to the restraining economic growth and hindering economic activities from small companies. Current South Korean President Moon Jae-in pledged to renew the economy by prioritizing jobs and laborers.
Over the past 50 years, South Korea has shown remarkable economic growth and has proven itself to become one of the prosperous countries in the world. This year, the forecast for the Korean economy is positive and upward; it looks like the present administration would do everything in his might to change the economic status of the country.
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